Roosevelt Institute | Cornell University

The economic impact of President Trump's health care executive order

By Raphael GendlerPublished October 19, 2017

President Trump's executive orders aim to make healthcare cheaper and increase market competition, but will result in expensive and weak care for individuals who need it most.

Designed to improve consumers' health care choices through increased competition, President Trump's recent executive orders' primary economic effect will be a cheaper but worse health care policy for most, and costly or nonexistent coverage for sick individuals.
    While the recent executive orders impact Obamacare, the Affordable Care Act is still the law of the land, as Trump and Congressional Republicans have as of yet failed in their mission to "repeal and replace" the law. Hence, the executive orders do not have the force of law. Rather, the orders direct federal departments to consider new regulations.
The most crucial regulation directed by Trump's order will eliminate subsidies for insurance companies. In the short term, this policy will make insurance companies will lose money. In the long term, insurance companies will charge higher service prices, affecting consumers. Interestingly, since insurance companies are still required to provide cheaper prices to qualifying individuals, the increased costs to insurance companies may be paid by rich consumers, many of whom are part of the Republican base.
    The negative effects of higher prices of health care are somewhat straightforward. However, the negative consequences of cheaper insurance are more nuanced. Insurance will be cheaper for some consumers, but more expensive for insurance companies to provide. This means insurance companies will likely have to either reduce production costs, leading to worse coverage. Insurance companies may also drop out of the market for healthcare or a certain sector of healthcare due to costs of providing services.
Given these realities, cheap healthcare is just healthcare that fails to provide necessary services to customers.. The primary economic effect of Trump's changes to the Affordable Care Act will be worse and more expensive health coverage. Deductible costs are likely to increase, especially for consumers with pre-existing conditions. Worse, insurance companies will be able to deny coverage to individuals with expensive to insure pre-existing conditions..
While Trump's plan is likely to succeed on its surface by lowering costs of insurance for many consumers, insurance will cover fewer benefits and will fail to provide coverage for pre-existing conditions. Individuals with no insurance or inadequate health insurance, a demographic likely to become larger under Trump's healthcare plans, create national economic problems. These many consequences are complex, but people without sufficient coverage still get sick and need medical attention. Failure to promote a system that provides the coverage creates economic strain.